The Doomed Economics of Drug Prohibition

Why the war on drugs can't overcome the economic incentives of the black market


One indisputable achievement of the U.S. war in Afghanistan, which overthrew a regime that alternately cracked down on opium production and profited from it, was an enormous increase in drug seizures. Between 2000 and 2010, according to a study published last week by the online medical journal BMJ Open, "seizures of raw and prepared opium increased by more than 12,000%." To put it another way, the amount of opium seized in 2010, 57,023 kilograms, was 126 times the amount seized in 1990.

Since Afghanistan produces the raw material for something like 90 percent of the world's heroin, you might expect such a dramatic crackdown to produce noticeable results. But the authors of the BMJ study, led by Dan Werb of the Urban Health Research Initiative in Vancouver, found that heroin purity in the United States rose by 60 percent from 2000 to 2007, the most recent year for which data were available, while heroin prices in Europe fell by 74 percent. This is what success looks like in the war on drugs.

The story is similar for cocaine and marijuana. "With few exceptions and despite increasing investments in enforcement-based supply reduction efforts aimed at disrupting global drug supply," Werb and his colleagues write, "illegal drug prices have generally decreased while drug purity has generally increased since 1990. These findings suggest that expanding efforts at controlling the global illegal drug market through law enforcement are failing." That's because supply reduction tactics such as ripping up poppies, spraying coca crops, and intercepting marijuana shipments are doomed to fail by the economics of the black market.

Prohibition plants the seeds of its own defeat by enabling traffickers to earn a premium for undertaking the special risks involved in supplying an illegal product. That means they are highly motivated to find ways around whatever roadblocks the government throws up between them and their customers. Given all the places where drugs can be produced and all the ways they can be transported to people who want them, the idea that the government could "cut off the flow" if only it made a more determined effort is a fantasy. As critics of prohibition often point out, the government cannot keep drugs out of correctional facilities, so even turning the entire country into a prison camp would not do the trick. The most that drug warriors can hope to accomplish is to impose costs on traffickers that are high enough to raise retail prices, thereby discouraging consumption.

The basic problem with that strategy, as drug policy scholars such as University of Maryland criminologist Peter Reuter have been pointing out for years, is that illegal drugs acquire most of their value close to the consumer. The cost of replacing destroyed crops and seized shipments is therefore relatively small, a tiny fraction of the "street value" trumpeted by law enforcement agencies (which may in any case be fictitious). As you get closer to the retail level, the replacement cost rises, but the amount that can be seized at one time falls. That dilemma helps explain why throwing more money at source control and interdiction never seems to have a substantial, lasting effect on drug consumption.

Yet according to Kevin Sabet, who used to work for the Office of National Drug Control Policy and now runs a prohibitionist group called Project SAM (Smart Approaches to Marijuana), it is "far too simplistic" to conclude that "the war on drugs has failed" simply because drug warriors have not achieved their own avowed goals. Self-reported drug use "has fallen by about 30% since 1979," Sabet notes in a recent CNN.com essay. He concedes "there are likely numerous reasons for this drop" but suggests that supply reduction efforts have played an important role.

It's hard to see how, since less pot smoking accounts for most of that decrease in drug use. Between 1990 and 2010, Werb and his collaborators report, the amount of marijuana seized by the U.S. Drug Enforcement Administration rose more than fivefold. During the same period, the average price of cannabis, adjusted for inflation and potency, fell by 86 percent. Take that, potheads!

Sabet's one specific example of a supply-side victory is a two-thirds reduction in Colombian coca acreage from 2000 to 2010. Meanwhile, he admits, "cocaine production has picked up" in Peru and Bolivia, an illustration of the "balloon effect": When you push it down in one spot, it pops up somewhere else. Still, Sabet says, "this shows that progress is not only possible, it is happening." I suppose that depends on what you mean by "progress."

This column originally appeared at Forbes.

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  1. Hey, it's open now.

  2. They should rename reason to something like defeatist magazine. We can't win the war on drugs so we shouldn't even try. We can't win the war on Obamacare so we shouldn't even try. We can't win the war on marriage licensing so we shouldn't even try. I'm an AmeriCAN not an AmeriCAN'T. Or maybe I'm a MexiCAN, I've never actually seen my long form birth certificate.

    1. Don't be dumb. We can't even win the War on Trolls. Hell, we can't even drive Tulpa away. Not only that, the worth of Tulpa's comment is just 22% of what they were worth in 2010. Chew on that, Fisty.

      1. Actually that statistic comes from fiscal year 2010, not calender year 2010, which makes everything you've ever said invalid.

        1. Plus he's not accounting for comment inflation, which makes everything he's ever said 53.5% MORE invalid.

          1. And he didn't define what he meant by the term "troll".

            1. That's just the term echo chambermaids use to describe anyone who doesn't subscribe to Reason-approved views anyway.

              1. If I were to park my food truck perpendicular to the curb would that make me a "troll"?

                  1. "Or maybe I'm a MexiCAN,"

                    Maybe you're a KANyen, Mr. President?

      2. At least he only stinks the place up on weekends.

    2. Let's play "Ask the Prohibitionist!"

      Q) How many prohibitionists does it take to screw in a light bulb?

      A) None. Changing the light bulb would be surrender. With enough effort and borrowed money we can make the old one work the way it's supposed to.

    3. Don't forget the War on Hookers & Bareback Pornstars

  3. it is "far too simplistic" to conclude that "the war on drugs has failed" simply because drug warriors have not achieved their own avowed goals.

    *** scratches chin ***

    It is "far too simplistic" to conclude that "the stimulus has failed" simply because administration economists have not achieved their own avowed goals.

    It is "far too simplistic" to conclude that "Obamacare has failed" simply because the Democrats have not achieved their own avowed goals.

    Yeah, that'll work.

    *** adds "Far too simplistic" to "Are you serious?", "I take full responsibility", and "WDATPDIM?" ***

    1. It's proved an unmitigated success: politicians trumpeted their compassion and unyielding devotion to law and order, police have enjoyed the rapid expansion of their operating budgets and access to military hardware in the name of combating distributors/gangs/cartels/terrorists, anti-drug statists enjoy the feelgood tingles up their legs while shitting on the poor... there's no failure here.

      1. No failure that the Anointed Ones will ever admit. Just like when progressive intellectuals believed in pro-racist theories, & supported many aspects of Nazism before they all did a complete 180? turn and made it look like fascists & race theorists were all right-wingers.

  4. Per Sabet's article

    Overall in the U.S., all drug use has fallen by about 30% since 1979.

    I'm not really qualified to assess the legitimacy of self-reported drug use, but it seems like heaps of opprobrium since the 60s combined with worrying rates of incarceration and the terrifying notion of prosecution might affect the willingness of even anonymous participants to disclose their habits.

    Even granting the numbers to which he refers are correct, the same table shows a 70% increase in marijuana consumption since 2001, and relatively stable rates for other illegal narcotics. If we're bound to acknowledge his 30% overall decrease since 1979, it seems only fair to point out the diminished returns and outright reversals since 2000.

    You know, if we're bound to consider only the utilitarian argument and not whether the social disruption and tyranny over the individual is worth a paltry self-reported 30% reduction.

    1. You know, if we're bound to consider only the utilitarian argument and not whether the social disruption and tyranny over the individual is worth a paltry self-reported 30% reduction.

      And one largely related to a drug with few associated problems.

      I'm almost at the point of thinking anyone who advocates for the War on Drugs either has a vested interest, or has mental problems.

    2. I wonder how much that drop, assuming it exists, is the result of the rise in the use of drugs like Adderall and Prozac and other psychiatric drugs. I have found that a good number of the drug users and abusers I have known were pretty obviously bipolar or suffering from some other mild mental issue and self medicating with drugs. If you can get legal stuff from your doctor, why self medicate?

      I really have an issue with saying drug use is down when the number of people on proscription drugs is so much higher than it used to me. Not that I have a problem with that. Whatever works for you. But, I am not seeing how this society is any less dependent on drugs than it was 30 years ago.

      1. If you can get legal stuff from your doctor, why self medicate?

        Because self medicating can be quite enjoyable. But the modern Puritans will have none of that! Pleasure is a sin!

        1. By "self medicating can be quite enjoyable", you surely mean masturbating to back issues of Cat Fancy while rolling around in your own feces.

        2. I would suggest that many of the people who are getting things like Prozac legally are doing so to at least some degree for pleasure rather than dyer need. That of course is fine. But they hypocrisy of a society that allows its doctors to drug millions of people up, including children, but then throws people in prison for decades for the crime of doping people up with out being a doctor is quite remarkable.

          This society loves drugs. It is almost like is prosecutes the drug war out of some twisted sense of penitence or something.

          1. Can you get much pleasure from Prozac?

            1. I am told that if you are not depressive and have even moods, it really mellows you out and gives you a sense of well being.

              1. I always thought it only worked 'over time.'

          2. I've taken anti-depressants (to quit smoking) and I hated the way they made me feel. Absolutely hated it. I'd much rather have a drink or a toke or a line or just about anything else.

            1. -I've taken anti-depressants (to quit smoking)

              I did not know they even used them for that, interesting. The 'off label' uses of these drugs is quite varied.

              1. Oh yeah. Google "antidepressants smoking cessation" and you'll get a ton of hits.

            2. I have never taken them. But depending on the drug, they are supposed to be fairly interesting if you don't have a real need for them.

              1. The same is true for opioids. Some patients don't want to take their pain medication because they don't want to be junkies. Studies have shown that if you are having real pain, opioids treat the pain. You only get the euphoric feeling from using opioids without physical pain and chasing the feeling is what most people get addicted. Otherwise everyone who broke their leg would be out tricking to support their new addiction.

          3. dyer need

            You did that one on purpose.

            All societies have always loved the drugs. Historically, drugs have been bigger than Jesus.

            1. I read somewhere that when the Egyptians first invented beer, they thought it was a gift from the Gods. I always love to throw the wedding at Cana in the face of my various teetotaler Christian friends. Dude, they drank so much they ran out of wine. The usual response is that wine in the 1st Century wasn't really wine. It was watered down. Yeah right.

              1. At that very famous wedding the guests were likely more concerned with getting a case of the Hershey squirts from bacteria in the water than with catching a buzz. Don't get me wrong, I'm not saying that a person couldn't have an interest in killing 2 birds with one stone.

                1. The water was better than you would think. The whole "you could never drink water" is somewhat true. But it is not totally true. They had good wells and springs.

              2. Main thing the teetotallers missing being that, weak or not, Jesus felt it important enough to keep the wine flowing that it merited one of the Major Miracles.

              3. When they throw that crap at you, ask them to explain why you don't put new wine into old bottles.

            2. If you made a recording we'd have to burn it.

          4. You need to include pain meds like oxycontin and oxycodone. How many people use them instead of booze or pot? They'd be better off with pot.

          5. 25% of American women take some type of anti-depressant.

          6. "It is almost like is prosecutes the drug war out of some twisted sense of penitence or something."

            I think you hit the nail on the head.

      2. I am not seeing how this society is any less dependent on drugs than it was 30 years ago.

        The number of TV ads for various psychoactive drugs is, um, mind-blowing.

        1. Correct. I do not see how if we are counting prescription psychoactive drugs our society is not using more drugs overall then ever before.

          1. One of the disturbing things being that I've seen the argument seriously advanced by medical professionals that marijuana is horrifically dangerous if smoked, but that if it can be presented in the form of some super expensive highly regulated pill, it would be just fine.

            Any mystery where this viewpoint is coming from?

      3. Shh, don't given them ideas. If drug crusaders figure out there's an untapped reserve of suburban housewives and white-collar schmoes ripe for plucking, we'll never end this thing.

    3. I'm not really qualified to assess the legitimacy of self-reported drug use

      I never answered one of those things honestly.

      1. I've never been contacted, probably because I've never owned a landline, but if I had I'd either be plain yogurt or an active junky. Not the occasional partaker I actually am.

      2. I was in high school a few years ago and they make you fill out an anonymous drug/sex/violence survey every year. When I didn't do drugs I said I did because I thought it was funny. Later when I did do drugs I said that I didn't because I didn't want to increase the odds of me being caught at all.

        1. I did exactly the same thing when I was in high school 25 years ago.

          That's why I just start laughing uncontrollably when politicians and "journalists" put on their serious faces to discuss the lates drug numbers.

          At best, what you're measuring is people who are stupid enough to get caught/admit to using illegal drugs.

    4. I've noticed that usually the prohibitionist parasites split the number of recreational drug users into separate categories of users of "legal" and "illegal" drugs. Go double check the statistic noted. I'll bet dollars to dirt that people who prefer prescription opioids aren't included in that 30% drop and would more than make up for it if the categories were combined.

      non sequitur:
      4 out of 5 prohibitionists agree that their all time favorite self improvement book is "How to Lie with Statistics" by Darrell Huff

    5. Looking at the chart (page 19), it's amazing that anyone can claim any kind of trend with a straight face. Heck, even the footnotes say that. "estimates since 2002 are not directly comparable to previous years."

  5. Without government, who would ensure our access to plentiful, cheap, pure heroin?

    1. A drugged up society is a subservient society.

      1. Opium is the opium of the masses!

  6. There are seriously people in here who think drug prohibition is a good thing - even in principle? Even if prohibition was fantastically successful in its avowed goals it would be an abomination - unless, ofcourse, you are one of those jackasses who don't believe in self ownership

    1. Drug warriors see it as a moral issue! Drug use is bad! It's like stealing, or murder, or rape! It's worse than stealing, or murder, or rape, because it's like they're stealing or murdering or raping themselves, their family and their community! It affects everyone! It's worse than violent crime! It's like terrorism! These people should be shot on sight! And did I mention the children?!?

  7. "The prestige of government has undoubtedly been lowered considerably by the Prohibition law. For nothing is more destructive of respect for the government and the law of the land than passing laws which cannot be enforced. It is an open secret that the dangerous increase of crime in this country is closely connected with this." ~~ Albert Einstein

    1. This is actually the most hugely important consequence, in my opinion.

      The absolute disrespect that our culture currently has for law enforcement is 100% tied to the War on Drugs.

      1. Yes. This is why tax collectors don't work with normal police, allowing "criminals" to pay taxes.
        This is why people don't trust things like police facial recognition software being used in large public spaces.
        If onyl the police forces were independently divided between a Property & Violent Crimes police force or a Nonconsensual Crimes force and a Vice Force the small number of elite serious crimes police could get all the toys, and would probably be allowed to do things normal cops wouldn't in regards to privacy since they'd be only focused on catching serious criminals, not catching potheads and people who have topless photos of their toddlers... all the moral panic bullshit community standards morality laws would be enforced by Vice which would have more restrictions (and less respect)

        I'm Canadian so I'm speaking in generalities; I don't know how Americans specifically disrespect police but I can guess it's in the form of voting to reduce their operational effectiveness & seeing them as criminals with badges

  8. Heck, this is going as well as our wars on poverty and illiteracy. Can we just claim victory and go home now?

    1. Is everyone yet poor? Can people still read?

  9. "Self-reported drug use "has fallen by about 30% since 1979," Sabet notes.

    Wow. That would be great, if only I cared enough to flush billions of dollars down the toilet trying to make people avoid getting high.

    You might as well tell me that we've spent billions, and self-reported Skittles consumption is down 30%.

  10. On Saturday the cops did a drug bust on the house across the street from me. I'd been getting letters stuck in my door from "concerned community members" about a community meeting to discuss the "obvious" drug dealing that's taking place at that house. The residents are both unemployed and have two kids. They're loud, a little odd (they push the limits of my city's poultry and waterfowl ordinances), and don't keep their property up, but they're nice people and aren't doing anything visibly illegal.

    Anyway, eight cop and two sheriff's cars surrounded the block and stood outside with shotguns. They searched the house for over an hour and ended up arresting the dad for a probation violation. The youngest girl (about four) was crying the whole time. I filmed the end of it, which bothered a few cops, who couldn't help but make obscene gestures and shout obscenities. Pigs.

    There's so much money in this. I guarantee this will be heralded as a successful drug bust, and all those "concerned citizens", many of who probably called the house in as anonymous tipsters, will have a glass of wine in victory at getting the family evicted. I think there's a long way to go.

    1. The truly disgusting thing being that not one person in this situation will stand back and say "holy shit, we were wrong. We're so, so sorry for kicking your door down, shooting your dog, and traumatizing your chidren."

      Instead they'll search and search until they find SOMETHING they can charge you with so as to make your life even worse in the name of justifying their own dick-headedness.

      1. They actually did it without SWAT, but it was still ridiculous. It was obviously a fishing expedition. The family's daughter is so adorable, there's no way a decent human being could have watched her crying and thought "we're doing the right thing". I hope the wretched "concerned citizens" feel awful. I should go to the next meeting.

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  12. We've seen this happening for a long time, but due to our Puritan/ Protestant roots, many people, especially the politicians, cannot divorce themselves from the idea that decriminalizing drugs means endorsing their use. Unfortunately, even though the data is in, I fear it's going to take a long time before we treat this as a health and wellness issue and stop acting like it is a criminal issue.

  13. Prohibition is working as planned. The Prison-Industrial Complex and their suppliers (vehicle, weapon, and aircraft manufacturers, lawyers, courts, etc...)are raking in big bucks. We give just Columbia about 20,000 houses worth of anti-drug aid per year, most of which is spent on US manufactured hardware. If we let the dopers out of prison, unemployment would skyrocket AND we'd have to deal with all these icky people like people. The people in power behind the prohibitionists see the failure of the WOD as a feature, not a bug. They're laughing all the way to the bank.

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